Reform lesson from Massachusetts
Sticker shock for state care plan
By Alice Dembner
The Boston Globe
January 20, 2007
A state panel yesterday outlined for the first time the minimum requirements for coverage under the state’s new health insurance law, a package estimated to cost $380 a month on average for an individual.
Panel members struggled yesterday to balance affordability with protection from catastrophic medical bills and remained divided on many issues.
“If we’re going to mandate this, people need to see that they’re getting some value,” said panel member Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology. But, he added, the premium is “bad news.”
“I’m trying to think of something to get this number down,” he said.
The minimum plan would limit annual out-of-pocket expenses to $5,000 for an individual and $7,500 for a family and include prescription drug coverage, according to the proposal by a subcommittee of the Commonwealth Health Insurance Connector board, which is implementing the new law.
As proposed, deductibles would run no higher than $2,000 per individual and $4,000 per family.
Advocates for the uninsured were stunned at the price, considerably higher than the $200 estimated by Mitt Romney when he was governor and first proposed universal coverage. A spokesman for insurers said the requirements were too prescriptive and could undermine the goal of universal coverage.
“For a large proportion of the folks not eligible for subsidized care, the bare minimum plan is flat-out unaffordable, not only because of the premiums, but the deductibles and out-of-pocket expenses,” said John McDonough, executive director of Health Care for All, an advocacy group that supports the health law. “This is a significant disappointment. We think the Connector and particularly the insurers need to go back to the drawing board.”
Eric Linzer, vice president of the Massachusetts Association of Health Plans, said the Connector committee’s recommendations were boxing insurers into a corner.
“There’s really a limited number of ways you can make premiums affordable,” he said. “If the minimum credible coverage is too high and coverage is unaffordable, it runs the risk of not achieving universal coverage.”
By Don McCanne, MD
It is astonishing that former Gov. Romney and the Massachusetts legislature are basking in the glory of having enacted a universal health program for the state, considering the process that is taking place.
They decided to establish a requirement that each person purchase a private health plan (individual mandate). That would work only if the plans were affordable. It was also decided that the plans must meet a reasonable standard of coverage. So what did they do? They declared that the plans would have to meet a reasonable standard of coverage and that they would have to have low, affordable premiums.
It was not as if this fundamental flaw in their proposal was simply overlooked. Many activists pointed out that you can have insurance premiums that are affordable, or you can have coverage that makes health care affordable, but you can’t have both. Health care simply costs too much. To be effective, the fragmented private insurance pools must have adequate funds to pay reasonable health care costs. That means that the private insurance funds must charge high premiums to fund them. Simply declaring otherwise is legislative malfeasance.
There is another option that would work. Abolish the fragmented risk pools and establish a single, universal pool to fund comprehensive health care. Automatically include everyone in that pool. Then, instead of attempting to tailor premiums to fit each individual, use equitable tax policies to fund the pool. That way, the contribution asked of each individual is affordable, and health care access is also affordable. And isn’t it affordability that everyone is trying to achieve?